Morgan Page: The Present Future

DJs are an interesting group -- many choose to get tattoos, chainsmoke, and fly private jets. When you think of "green" and DJs, the first thing that comes to mind is a wad of cash, or something illicit -- not a burning concern for the environment.

Energy Sector News

The March 24 opinion from the U.S. District Court for Nevada granted in part and denied in part Ormat’s motion to dismiss an action brought by ex-Ormat employees under the False Claims Act. The ex-employees are alleging fraud by Ormat in its preparation of three Section 1603 [hyperlink: appended below] cash grant (Cash Grant) applications for geothermal projects. In theory, either party could appeal, but that seems unlikely.

This week New York Governor Andrew M. Cuomo announced the signing of an agreement between the New York Power Authority (NYPA) and State University of New York Polytechnic Institute (SUNY Polytechnic) that aims “to create a world-class facility devoted to energy technology innovation and the rapid deployment of smart-grid technology to modernize New York’s electric grid.”

Beijing just announced that it will close the last of its four major coal-fired power plants in 2016, avoiding an estimated 30 million tons of carbon. This welcome step, carried out as part of China’s national Air Pollution Action Plan, is t…

Sizing the supply side of the global PV industry has never been
easy. As annual shipments grew to gigawatt heights outsourcing
increased in tandem making it almost impossible to settle on a
reliable number for the size of the industry in any given year.

Outsourcing, a common practice in all industries, takes place
when one manufacturer buys a product or component from another
manufacturer. In the PV industry, manufacturer A buys
cells from manufacturer B, assembles the cells into modules and
includes these modules in its in-house production. When
both manufacturers report the resulting megawatts as their
shipped product, the industry is instantly oversized. Since most
manufacturers engage in outsourcing, the practice compounds and
obscures the real capacity of the industry.

Figure 1 (below) provides an example of how easily the PV
industry can be made instantly bigger by double counting.
In Figure 1, Trina, Canadian Solar, Jinko, Renesola and Yingli
have a combined 9.1 GWp of c-Si cell manufacturing capacity and
a combined 15.3 GWp of module assembly capacity for an excess of
6.2 GWp of module assembly capability. These manufacturers
will buy cells from other sources and include them in their
production.

The manufacturers with excess cell capacity ship cells to the
manufacturers with excess module assembly capacity and everyone
reports everything. And thus the PV industry has been oversized
on an annual basis for decades.

One misunderstanding that contributes to the annual oversizing
concerns what should be counted. A cell without a module
is not going to be mounted on a rooftop, but a module without a
cell can’t generate electricity. This is not a chicken and
the egg conundrum. The size of PV industry shipments (or sales)
annually is limited by its semiconductor — that is, crystalline
cell or thin film panel capacity.

Unfortunately, there is still a misunderstanding about the
difference between module assembly capacity and cell
manufacturing capacity. Twenty years ago almost 100
percent of the crystalline manufacturers assembled their
internally manufactured cells into modules. Currently,
manufacturers, particularly in China, are adding significantly
more module assembly capacity than cell manufacturing
capacity. In the case of China, given the tariff
constraints its manufacturers face globally, it makes sense to
include production that allows for the acquisition of cells from
other regions such as South Korea and Malaysia. Figure 2
presents module assembly capacity shares by region for 2014.

In Figure 2, there are 51.3 GWp of announced shipments and
40.2-GWp of shipments from in-house c-Si cell and thin film
production plus the previous year’s inventory. The reason for
the 11.1-GWp difference is this: manufacturers bought cells
and/or modules from other sources and included the acquired
product in their shipment announcement, while the original
manufacturer also reported the product in its shipment
numbers.

Does It Matter Who’s on First?

The annual lists of the top ten PV manufacturers becomes
irrelevant if the origin of the product being reported becomes
so convoluted that no one knows the genesis of anything.
The lists are typically comprised of the same manufacturer
names, but, as these lists are based on different methodologies,
the names are almost never in the same order. Some specificity
concerning what is being ranked is necessary in order to give
these lists meaning. Without specificity the lists just do not
matter.

As the module without cells is an empty frame, it is important
to know who manufactured the cell in the first place. One reason
that this is important is quality. A photovoltaic module is an
electricity producing product that is expected to reliably
generate electricity for at least 25 years. Products that
carry this responsibility for reliability and longevity need to
be clear about their pedigree. This should be a matter of
pride, but if quality issues arise it may be a matter of
necessity.

The fact is that once the module is assembled it is very hard
to know who the original cell manufacturer was unless, of
course, the module assembler reports these statistics.

Who’s on first does not matter as much, frankly, as who’s cells
are inside of whose modules.

Why We Like Big Numbers

Constant growth has been the PV industry mantra for years even
though, slower stable and profitable growth is a better path.
The desire for ballooning growth is one reason that double
counting of shipments is tacitly accepted by everyone. After
all, referring to the previous example, 51.3 GWp is more
impressive than 40.2 GWp (shipments from annual production plus
previous year inventory) despite the fact that it was arrived at
by counting the same cell once, twice, maybe three times.
Considered through the lens of bigger-is-better, the 38.9 GWp of
shipments from 2014 production (not counting inventory) is
downright penurious.

That the annual celebration of ever bigger numbers has come
hand in hand many years with low to negative margins is
typically ignored until blatant — and never mind that it is
almost impossible to figure out the real cost of producing
anything in the PV industry.

We like big numbers because they symbolize success.
Unfortunately, big numbers are often a façade obscuring
failure. The real success is the ability to point to PV
modules that have been in the field for over 30 years reliably
generating electricity. This sort of success offers proof
that photovoltaic technologies are not the future, this
technology is the electricity generating technology of now.

The real danger of big numbers is that they are both addictive
and self-fulfilling. Addictive because the attention they
garner feels good, self-fulfilling because of the tendency of
people to look for data to support their beliefs.

So, who’s on first, what’s on second matters less these days
primarily because the numbers have been combined and recombined
often enough to render them meaningless. The same
confusion exists on the demand side of the industry, where
multi-megawatt projects are sold and resold and therefore
counted and recounted, while the difference between a grid
connection and an installation is sometimes misunderstood.
The point is — and should be — quality up and down the value
chain.

Paula Mints is founder of SPV Market Research,
a classic solar market research practice focused on gathering
data through primary research and providing analyses of the
global solar industry. You can find her on Twitter

On Tuesday, more than 200 leaders from the public health, academic, business, and environmental communities traveled to Salem, Oregon, to rally and hold lobby meetings with legislators on this session’s top environmental bills as part of the…